Trip Van Noppen
In a decision expected today, the Obama administration could save American households up to $21 billion over the next 30 years, while saving as much energy as is consumed annually in the states of Virginia and Arkansas combined.
The decision affects efficiency standards for new water heaters, an appliance that may sound insignificant and even trivial but in fact offers a huge opportunity for energy and financial savings.
The U.S. Department of Energy – the agency tasked by Congress to set standards for many household and commercial appliances – is set to announce its choice between two efficiency standards for water heaters.
The difference in energy savings between the weaker standard and the stronger standard amounts to just over 1 quadrillion British thermal units – a mind-boggling amount of energy that could supply electricity to 7.6 million homes for a full year.
In financial terms, if he chooses the stronger standard over the weaker standard, President Barack Obama could save U.S. households an additional $6 billion (that’s $21 billion in savings as compared with $15 billion).
What does all of this mean to you and me?
More efficient water heaters come with a price – an extra $82 to $102 for gas models and $96 to $160 for electric models, according to the Energy Department.
Yet within six years, the average family will recover these additional upfront costs through reduced utility bills. That cost recovery will occur under either standard under consideration, but families with larger water heaters will save much more under the stronger standard, getting back their upfront costs within as little as four years.
Though Obama has continually hailed the potential of energy efficiency and has promoted it through many of his energy and economic policies thus far, he now faces a new series of tests.
Over the next three years, the Department of Energy will set new efficiency standards for more than a dozen categories of home and commercial appliances like furnaces, refrigerators, air conditioners and clothes washers, just to name a few. If Obama chooses to adopt strong standards for all of them – standards achievable with existing and affordable technology – he will cut 126 million metric tons of greenhouse gases each year. That’s equivalent to eliminating the emissions from 50 power plants. He will also save consumers $19 billion a year.
Yet there is opposition. Some industry groups and appliance manufacturers are doggedly fighting strong standards to avoid making new investments in production equipment. But other companies are proving that innovation and ingenuity translate into revenue and jobs.
Some manufacturers are also claiming that customers will be turned off by the slightly higher price tags of more efficient appliances. However, the vast majority of households will quickly recover any difference in the upfront prices of these appliances through lower utility bills; in some cases, they will make double the upfront cost back in utility bill savings. And strong minimum standards like these are necessary to protect renters who otherwise would be stuck paying higher utility bills when landlords install inefficient equipment.
In today’s rule on water heater standards and in all of the upcoming standards over the next three years, Obama and Energy Secretary Steven Chu face clear choices.
They can help prop up the destructive and antiquated fossil-fuel industries of the 19th century, or they can improve energy efficiency – the least controversial and most widely accepted of their climate and energy policy options. Doing so will propel us toward energy independence, help the administration reach its stated carbon-reduction goals and make the United States a world leader in this field, creating jobs in the process.
When GE announced last year that it was introducing a new water heater that uses less than half the electricity of a traditional model, it also celebrated the creation of 430 new jobs at its manufacturing facility in Louisville, Ky., which will produce them. These are just some among many jobs that will be fueled by efficiency innovations.
“One of the fastest, easiest, and cheapest ways to make our economy stronger and cleaner is to make our economy more energy- efficient,” said Obama in June, citing California’s success on setting new efficiency standards as a model for change.
“In the late ’70s, California enacted tougher energy efficiency polices. Over the next three decades, those policies created 1.5 million jobs. Today, Californians consume 44 percent less energy per person than the national average. And over time, this prevented the need to build at least 24 new power plants.”
While legislation on climate change and clean energy struggle through the Senate, this water heater standard, along with every other appliance standard over the next three years, represents a huge opportunity for America. Obama should seize it.